It works in most formats. You want a new TV and you can buy it for say £400 cash, or you can spread the cost into handy regular payments for your ease. The only problem with that is that when you come to the end of the agreement and you work out just how much you’ve paid back you can bet your bottom dollar that you would have paid much much more than the £400 it would have cost in the first place.
It happens with cars, houses, anything that you want to spread the payment of actually. Believe it or not it also happens when it comes to football transfers.
Quite often these day clubs spread their money and pay for a player over x amount of years. It’s part of the reason why clubs are in such a mess and has assisted the boom years and inflated transfer fees that we see in virtually every transfer window.
We used to do it at Newcastle which is why, in some cases, we were still paying for players that had long since left the club. Either that or the money owed was repaid out of the transfer fee that we got for selling a player. I’m not making that up – it’s all in the accounts.
Now I know figures aren’t everyones cup of tea, unless you’re Ryan Giggs and the figure is Imogen Thomas in which case I’m fairly certain that he’d enjoy drinking out of her cup – allegedly. Anyway, figures aren’t for everyone so I won’t bore you with them.
Newcastle have changed their approach in recent years though, mainly because they had to. Right now we don’t do credit and we deal in cash only. This can be both a help and a hindrance though as suddenly our pool of money doesn’t go as far, although on the flipside it doesn’t take as much money to land a particular player if we pay up front for them.
Clubs that we deal with won’t be used to that after the way things have gone in the last decade or so, maybe longer, so in some cases it will be to the benefit of the selling club to accept the cash up front. It’s deal done for them and they can go away and spend a lump some rather than having to budget for extra payments over the next few years. They could even split it down again and stretch it further by purchasing players on the instalment plan and using the money we paid for one player up front to buy two or three over a few years.
Hopefully this will stand us in good stead when it comes to player recruitment over the summer. I’m sure a lump sum now would appeal to clubs over a slightly higher fee received over a number of years. Think about it…… Sell your car now for £750 or sell it for £250 over four years. What would you choose? I’d choose the former as I’d spunk the wedge on a deposit for a better model!
If there is one thing that Newcastle are at the moment it is that they are cash rich after the sale of Andy Carroll. Obviously, as highlighted earlier, paying up front will mean the cash pot whittles down quicker than what it would if we paid by instalments, but it also means that we would probably be the preferred choice of any selling club.
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